The Renault-Nissan Alliance has entered into a joint venture with Russian Technologies State Corporation, making the Alliance the controlling shareholder of AvtoVAZ, Russia’s largest carmaker and market leader.

The deal sees the creation of Allian Rostec Auto BV, in which Renault-Nissan will hold 67.13% by mid-2014 at a cost of RUB23m (£459m) and thus hold 74.5% of AvtoVAZ, which, in turn, owns Lada. The Alliance also owns and operates retail and finance for luxury brand Infiniti and Dacia, the Romanian marque and recent UK market entrant.

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The investment is split between an investment of RUB11.3bn, on top of a purchase of 25% of AvtoVAZ in 2008, by Renault for 50.1% of the joint venture and an investment of RUB11.7bn by Nissan for 17.03%.

As part of the agreement, AvtoVAZ will sell non-core assets to repay loans of RUB8bn to Russian Technologies. Repayment of the remaining debt owed to Russian Technologies will stay interest-free until 2032, meaning AvtoVAZ will be able to operate with lessened liquidity constraints.

The deal will also see Dominique Thormann, executive vice president and chief financial officer of the Renault-Nissan Alliance, among three representatives of the alliance appointed to the Alliance Rostec Auto BV board.

Russia is now reported as the third-biggest market for the Alliance which sold 878,990 cars there in 2011, including 578,387 Ladas, a market share of 32.9%.

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While reports for Renault-Nissan showed a dip in revenue from global sales, revenue from finance, through RCI Banque, had risen in the first quarter of the year, although both worldwide sales and finance were down across the first half of 2012.

Renault has also sold its remaining 6.5% share capital, and 17.2% of the voting rights, in Volvo AB, which runs finance through Santander Consumer Finance in the UK, for €1.48bn (£1.20bn).

richard.brown@timetric.com